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Brexit-Deal or No deal?


sancho panza

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Little stretch of the imagination..

Goldman's harbinger pulls a unicorn out of the hat.

Pound goes ballistic.

FTSE crashes

Banks collapse

World banking system collapses as the leverage becomes apparent.

By trying to screw us out of our referendum they bring the whole shitshow down. 

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20 hours ago, Sugarlips said:

I reckon if they can some how fudge a unicorn deal sterling is gonna rocket ...initially anyway.

 

I’m no trader but I reckon ‘Deal’ is not priced in to the pound at present - remembering the market traditionally sees £ as a safe haven (🤫) in tough economic times and the leading recession indicators are flashing red atm..

This is how I see it re: Sterling. Wider expectations are always priced into the markets, and if there is some sort of 'deal' put together to effectively keep the UK in the single market then the £ could skyrocket.

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I wouldn't be surprised to see 1.20 prior to March 29 and 1.40-45 after. Ultimately trending back to 1.30, unless the BOE actually want to change anything, which I doubt they will. Personally I'm short GBP long term.

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Hodges says it's No deal unless something drastic happens

 

https://www.icis.com/chemicals-and-the-economy/2019/01/no-deal-brexit-remains-uk-law-unless-mps-reverse-their-previous-votes/

That couldn’t happen” are probably the 3 most dangerous words in the English language. They mean “I don’t want to think about something that might be painful“. So if you hear MPs saying a “No Deal Brexit can’t happen“, ignore them. They are wrong.

‘NO DEAL’ BREXIT IS THE LAW OF THE LAND
The issue is simple, yet seemingly too painful for most MPs and commentators to accept.

The EU Withdrawal Act (2018) became law on 26 June last year.  It set 29 March 2019 as Brexit Day.  It allowed for a Transition Agreement if a Withdrawal Agreement was agreed. Without a Withdrawal Agreement, the UK simply leaves with No Deal.

The law is the law, and the Act is primary legislation, which means it has since been incorporated in a whole range of laws and regulations as part of the UK’s exit preparations.  It cannot, therefore, be overturned by statements that claim “There is no majority for No Deal”.

In fact, during the Committee stage, the House of Commons voted 320-114 in Committee Stage against staying in the Customs Union.  It also voted 319-23 against a second referendum. And last week, MPs voted against the proposed Withdrawal Agreement.

So if MPs say “No Deal can’t happen”, they are wrong. They have already voted for ‘No Deal’.

CHANGING PRIMARY LEGISLATION IS VERY HARD
RfB2.png

Of course, MPs could still change their minds. But there are now less than 70 days till Brexit.  And they would also have to agree this with the other EU 27 countriesThese represent nearly 450 million people versus the UK’s 66 million.

Equally important is that the UK has been heading in this direction since negotiations started:

Since then, MPs have voted for the Withdrawal Act; against remaining in a Customs Union; against a new referendum; and against the Withdrawal Agreement. They have also voted for invoking Article 50 and for setting 29 March 2019 (by a majority of 384 votes) as Brexit Day.

So time is running out for them to change their minds.

THE ALTERNATIVES TO ‘NO DEAL’ ARE CURRENTLY WISHFUL THINKING
RfB5.png

The politics of Brexit also make it unlikely that the government will change its mind, or be forced to change its mind:

  • Treason May knows very well that any move to “soften” Brexit by joining a Customs Union would split her Conservative Party down the middle. And any Tory MP who voted for a softer Brexit knows they would likely be deselected as a candidate and lose their job
  • Labour leader Jeremy Corbyn voted to leave the EU in the 1975 referendum, and against the Maastricht/Lisbon Treaties. Many traditional Labour voters are also strongly pro-Leave. So any Labour MP voting against the Party line also faces the risk of deselection

It is therefore hard to see why simply extending Article 50 beyond 29 March would change anything.

And extending would enormously complicate the European elections in May. At the moment, the UK is not taking part in these, as it is leaving on 29 March. But if it isn’t leaving after all, there is little time left to prepare to vote on 23 May

Of course, the EU27 might agree an extension if the UK decided to hold a second referendum, as long as the vote was held before the new Parliament starts work on 2 July. But they would likely first want to know the question on the ballot paper.

Would the government ask if the voters approved of May’s Withdrawal Agreement? Would it instead ask if they wanted to stay in the EU? Or would it simply ask if they wanted to leave with No Deal?

Any of these questions are possible.  But deciding between them could be very divisive in itself.  And a referendum campaign could be even more divisive.  Plus, its outcome would be very uncertain if voters worried that democracy was being undermined by a refusal to accept the first result.

“A week is a long time in politics”as former premier Harold Wilson famously noted.  So it is possible that Sir Keir Starmer’s call yesterday for a new Labour approach might succeed.  Equally, MPs might decide to support the Nick Boles and/or the Dame Caroline Spelman/Jack Dromey motions next week.

But this would only be the start of a quite complex process, which might well end with a General Election being called – and all the while, the clock is ticking.

So after the government’s defeat on Tuesday, UK businesses and those that trade with the UK must urgently begin to plan on the basis that a No Deal Brexit on 29 March is now UK law. 

 

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So,here's some logic./

 

1) Corbyn and Labour can't vote for a deal created by May a) because it's an absolute dsiaster b) they don't want to be seen a propping up a failing Tory

2) Brexit Toires won't vote for it a) because it's a disaster b) because even disasters don't want to be associated with it

3) Lot of MP's won't vote for an extension becasue theyy don't want their snouts to leave the trough at the next GE.Not everyone is as prinicpled as Anna Soubry

4) Other EU countries won't all agree a deal before March 29.

 

No deal value at 7/4? Or am I missing somethign?

 

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4 hours ago, sancho panza said:

So,here's some logic./

 

1) Corbyn and Labour can't vote for a deal created by May a) because it's an absolute dsiaster b) they don't want to be seen a propping up a failing Tory

2) Brexit Toires won't vote for it a) because it's a disaster b) because even disasters don't want to be associated with it

3) Lot of MP's won't vote for an extension becasue theyy don't want their snouts to leave the trough at the next GE.Not everyone is as prinicpled as Anna Soubry

4) Other EU countries won't all agree a deal before March 29.

 

No deal value at 7/4? Or am I missing somethign?

 

I see 5/2. Worth a flutter - it will hedge against the temporary stock market falls that week!

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8 hours ago, sancho panza said:

So,here's some logic./

 

1) Corbyn and Labour can't vote for a deal created by May a) because it's an absolute dsiaster b) they don't want to be seen a propping up a failing Tory

2) Brexit Toires won't vote for it a) because it's a disaster b) because even disasters don't want to be associated with it

3) Lot of MP's won't vote for an extension becasue theyy don't want their snouts to leave the trough at the next GE.Not everyone is as prinicpled as Anna Soubry

4) Other EU countries won't all agree a deal before March 29.

 

No deal value at 7/4? Or am I missing somethign?

 

An agreed extension of A50/leaving date or a last minute agreement of some kind. The EU are well known for pulling something out of the hat in the 11th hour

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9 hours ago, 201p said:

I see 5/2. Worth a flutter - it will hedge against the temporary stock market falls that week!

I agree on the market falls.I'm steadily building some shorts.markets priced for perfection-well the shares I'm aiming at anyway-housebuilders like BKG/BDEV etc.I'm not so sure.

One thing is certain,there will be uncertainty.

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13 hours ago, Thorn said:

Visited the border in Ireland today. No sign of checkpoints returning. No diggers.

No deal.

They'll just erect something as a token gesture, the Irish border even when it existed before was a bit like the toll booth in Blazing Saddles.

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16 hours ago, sancho panza said:

I agree on the market falls.I'm steadily building some shorts.markets priced for perfection-well the shares I'm aiming at anyway-housebuilders like BKG/BDEV etc.I'm not so sure.

One thing is certain,there will be uncertainty.

At 5/2 I could only bet £80, but the odds are reasonable. We're more likely to see surprises to the downside in this current market.

---

I remember a similar story with OPEC and they all had to get round the table and agree a deal on a production cut - P Jones bet on a no deal, as he said the likely hood of 13 people agreeing was remote.

Segment starts 6:15 - no guarantees though on a no deal - we're not privy to all the information. [Oh this documentary has been removed from circulation, so watch it while you can.] This documentary is gold.

 

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Watching that video a bit more - there may be some ruthless traders who might trigger the market to sell off just before to make the market think someone knows something (when there is nothing).

There are plenty of games people can play here, at school we used to call it "shit stir".

It will not be a boring stock market in March. 

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Democorruptcy
On 15/02/2019 at 00:14, sancho panza said:

So,here's some logic./

 

1) Corbyn and Labour can't vote for a deal created by May a) because it's an absolute dsiaster b) they don't want to be seen a propping up a failing Tory

2) Brexit Toires won't vote for it a) because it's a disaster b) because even disasters don't want to be associated with it

3) Lot of MP's won't vote for an extension becasue theyy don't want their snouts to leave the trough at the next GE.Not everyone is as prinicpled as Anna Soubry

4) Other EU countries won't all agree a deal before March 29.

 

No deal value at 7/4? Or am I missing somethign?

 

Currently 4.2 at Betfair but that's by 30th March

https://www.betfair.com/exchange/plus/politics/market/1.153694387

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7 hours ago, 201p said:

At 5/2 I could only bet £80, but the odds are reasonable. We're more likely to see surprises to the downside in this current market.

---

I remember a similar story with OPEC and they all had to get round the table and agree a deal on a production cut - P Jones bet on a no deal, as he said the likely hood of 13 people agreeing was remote.

Segment starts 6:15 - no guarantees though on a no deal - we're not privy to all the information. [Oh this documentary has been removed from circulation, so watch it while you can.] This documentary is gold.

 

Exactly this.UK domestic facing stocks are priced for staying in the EU imho.Berekely at £38 is a classic sign.Pidgeley was selling 18 motnhs back at £37.Lot of the other builders appear to be weakening now.I think march could be volatile

re the agreement,as I understand all EU countries have to agree to our deal.Or have I got that wrong?

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7 hours ago, 201p said:

Watching that video a bit more - there may be some ruthless traders who might trigger the market to sell off just before to make the market think someone knows something (when there is nothing).

There are plenty of games people can play here, at school we used to call it "shit stir".

It will not be a boring stock market in March. 

Absolutely.I think we'll get a last minute deal through myself.But there is a better chance of no deal than the price suggests

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Hodges again

https://www.icis.com/chemicals-and-the-economy/2019/02/companies-and-investors-have-just-30-working-days-left-to-prepare-for-a-no-deal-brexit/

No-Deal.png

Companies across the UK and EU27 are suddenly realising there are now just 30 working days until the UK will likely abandon its 45-year trading relationship with the EU, and start to trade on WTO terms.

If this happens, every supply chain involving a movement between the UK and EU27 will change. And all those supply chains governed by EU deals outside the EU will also change. A large number of industries are already being impacted:

  • Scotch whisky exports to Korea worth £71m ($90m) a year, risk a 20% tariff after 29 March if the EU’s Free Trade Agreement is replaced by WTO rules. It is now too late to export by boat, causing some exporters to use expensive air freight to beat the deadline. But capacity is already almost full.
  • Many banks, insurance companies and asset managers have already moved staff from London into the EU27.  They cannot risk waking up on 30 March to find they can no longer serve customers from London, because they have lost the essential EU “passport”
  • “CE Marks” issued in the UK will no longer be valid in the EU27 after No Deal  – making it difficult to sell any goods that need safety, health or environmental approval.
  • And last week, BASF’s UK MD, Richard Carter, told Ready for Brexit that for the world’s largest chemical company:  “The thought of having to re-register with a UK REACH equivalent if there is no deal and if there is no recognition equivalence is a huge concern”.

THE UK REMAINS ON COURSE TO LEAVE THE EU WITH NO DEAL ON 29 MARCH
But surely, you say, “this cannot happen”.  After all the UK’s main business organisation, the Confederation of British Industry, has already warned that No Deal would create “a situation of national emergency“.

But the leading Tory Brexiters don’t believe this.  Their 111 votes, combined with the 10 votes from the Democratic Unionist Party, meant premier May’s Withdrawal Agreement was defeated by 230 votes last month.  It would have provided a Transition Agreement until the end of 2020.

However, their votes then swung behind her to defeat the motion of No Confidence in the government, which would have led to a general election.  Why did they do this, you might ask, given they had just voted against her key policy?

The answer is that the Brexiters have a completely different view of the Brexit negotiations, as I noted in The pH Report last year.

They simply don’t accept the CBI argument. Instead they believe the EU27 will be the main losers from No Deal as they argue the financial outcome will be:

“Plus £651 billion ($875bn) for the UK versus minus £507bn for the EU: it could not be more open and shut who least wants a breakdown.“

In their view, the EU27 will be forced to offer a better deal if the UK just leaves on 29 March.

They also, as I noted here in December, will be quite happy to see the end of key industries such as autos, as the leading Brexiter economist Prof Patrick Minford told the Treasury Committee in October:

You are going to have to run it down … in the same way we ran down the coal industry and steel industry. These things happen.”

The alternatives to No Deal are now also extremely limited.  The Caroline Spelman/Jack Dromey resolution to block No Deal was passed last month by 8 votes. But it was only a resolution and has no legal force.

Of course, Parliament might change its mind and decide to vote for May’s Agreement.  Or the government might revoke its Article 50 notification before the UK leaves on 29 March. But both would split the Tory and Labour Parties and are unlikely to happen.

The government could also decide to hold a second referendum. But again, this would split both parties and is unlikely.

It is therefore hard to disagree with the independent Institute for Government, who concluded: “Britain’s politicians are unwilling to put jobs and the economy above party politics.

The only other option is for MPs to effectively take over the government by demanding that it stops No Deal.  It is not clear how this could happen, but presumably they could pass legislation demanding that May asks Brussels for a lengthy extension to Article 50.

But such a move by Parliament has never happened before. It would need key Ministers such as Chancellor Philip Hammond to vote against their own government. It would also need support from enough Opposition MPs to overcome Brexiter resistance.

It would also risk a constitutional crisis, as it would replace an elected government.  And in terms of practicalities, it would presumably also mean that the UK would take part in the EU Parliament elections, as it would still be a full EU member in May. The whole process would take the UK into completely uncharted water.

THERE ARE JUST 30 WORKING DAYS LEFT TO PREPARE FOR A NO DEAL BREXIT

WTO-rules-Jul18.png

Anticipating this risk led me to co-found Ready for Brexit last year, to help businesses navigate the challenges and opportunities created by Brexit.

It is effectively the one-stop shop requested recently by the CBI.  It provides curated links to all the areas where you may need to urgently prepare for Brexit.

The video explains what WTO rules could mean for your business. Please watch it now, and then decide if you need to start planning today for whatever may happen on 29 March.

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https://wolfstreet.com/2019/02/22/with-disorderly-brexit-increasingly-likely-eu-blinks-on-derivatives-clearing-in-london/

Disorderly Brexit Increasingly Likely, EU Blinks on Derivatives-Clearing in London

by Don Quijones • Feb 22, 2019 • 14 Comments

No one can afford even the smallest hiccup in derivatives.

By Don Quijones, Spain, UK, & Mexico, editor at WOLF STREET.

After months of furious lobbying, the City of London Corporation has finally got what it wanted: recognition by the European Securities and Markets Authority (ESMA) of the three biggest clearing houses it hosts, LCH, ICE Clear Europe and LME Clear. This will allow the three to continue providing services throughout the EU even in the event of a no-deal Brexit, which is looking increasingly likely. It will also limit the potential for disruption in central clearing and prevent any negative impact on the financial stability of the EU, says ESMA.

Clearing is where a company acts as a middleman between financial trades, collecting collateral and standing between derivatives and swaps traders to prevent a default from spiraling out of control. Since the 2008 Financial Crisis and the inexorable expansion of derivatives trading, clearing has become an integral part of the global financial infrastructure.

For the City of London, clearing is the jewel in its crown providing thousands of jobs, billions of pounds in annual profits and a vital strategic edge over rival financial hubs. London is the global leader for the clearing of all kinds of currency-denominated derivatives, particularly the euro. The London Clearing House (LCH) says it clears €927 billion ($1.05 trillion) worth of euro-denominated contracts a day, roughly three quarters of the entire global market. The second-largest operator in the sector, Paris, clears just 11% of the transactions.

For years, the French government, together with the European Central Bank, have tried to wrest control of the clearing of euro-denominated transactions from the City of London, for largely justifiable reasons. And Brexit was supposed to provide the perfect alibi. But alas, it hasn’t happened.

Instead, with just five weeks left until Brexit Day (March 29), a number of major EU Member States, including Germany, France, the Netherlands and Italy, are fast-tracking national legislation to enable bankers to continue to service the 18 trillion pounds ($23 trillion) of derivative contracts that could be disrupted if the UK crashes out of the EU without an agreement. According to Bloomberg, the Dutch legislation may even allow brokers and high-speed traders to conduct new business from London, at least for a while.

It wasn’t meant to be like this. Since the day the British people voted to leave the EU, rival European capitals, in particular Paris, have done everything they can to lure London’s financial service providers across the Channel. Many banks have indeed moved some of their operations to other cities, in particular Berlin, Paris and Dublin, but not remotely on the scale many think tanks had predicted. Paris has even made moves on London’s gold market.

But the most coveted prize of all was London’s clearing business. However, any attempt to move euro clearing away from London to the continent was likely to take years to implement, ramp up costs for companies across the region and be hugely disruptive to a market that had already played a leading role in the last global financial crisis. As it turns out, two and a half years is not nearly enough time to uproot and move en masse such a large, complex market that took decades to develop in one of the world’s most bank-friendly jurisdictions.

In October 2018, the International Swaps and Derivatives Association (ISDA) and six national trade bodies within the EU released a paper on “The impact of Brexit on OTC [over-the-counter] derivatives.” It features a summary table of 16 steps EU authorities can take to “mitigate adverse impacts of Brexit”. The table contains eight items marked in red as “immediate/high-impact”, seven in orange as “immediate/low impact”, and only one in yellow as “delayed impact”.

In other words, if done badly, bad things could quickly ensue. With a disorderly Brexit looking increasingly likely, the EU appears to have taken note. Last week German Finance Minister Olaf Sholz even said that “everyone in the financial market is totally calm” about a possible no-deal Brexit. “Because they know it’s well done, well prepared and well thought through and it will work somehow. For the transport of goods, it will be more complicated.”

For the City of London and the myriad interests it represents, the latest concession by Brussels and national EU government is a move in the right direction. But it’s still only “a partial and temporary fix,” says Miles Celic, the chief executive of the City’s most influential lobbying group, City UK. “Time is running out to resolve these technical issues, and while such temporary fixes are essential, long-term stable solutions are needed to provide the certainty that customers and clients across the whole of Europe and beyond need.” By Don Quijones.

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  • 3 weeks later...
sancho panza
17 minutes ago, 201p said:

https://www.bbc.co.uk/news/uk-politics-47547887

Brexit: MPs reject Treason May's deal by 149 votes

Will it be 3rd time lucky? Time is running out.

https://order-order.com/2019/03/01/german-comedian-nails-brexit/

https://www.youtube.com/watch?v=jxtB8f4WcIw

German comedian Henning Wehn made a number of surprisingly sensible points on Question Time last night, pointing out the utter futility of holding yet another referendum. A refreshing change from the usual ‘woke comedian’ bores…

“If two years ago you felt that the country is run by unelected European Union bureaucrats, well I don’t know what would have changed your opinion on that one over the past two years!”

Worth a watch…

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Leave would win by a larger margin if there was another referendum.

And in any event any referendum campaign would be so savage that to call one would be downright irresponsible.

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1 hour ago, sancho panza said:

https://order-order.com/2019/03/01/german-comedian-nails-brexit/

https://www.youtube.com/watch?v=jxtB8f4WcIw

German comedian Henning Wehn made a number of surprisingly sensible points on Question Time last night, pointing out the utter futility of holding yet another referendum. A refreshing change from the usual ‘woke comedian’ bores…

“If two years ago you felt that the country is run by unelected European Union bureaucrats, well I don’t know what would have changed your opinion on that one over the past two years!”

Worth a watch…

Germans talk a lot of sense, even when it goes against their own book.

I miss that.  The UK media, etc by contrast is just purile, infantile, and trashy.

But the humour is better!

PS: Saw him live.  Funny!

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Whether you are Leave or Remain all this current debacle has shown is that our current crop of politicians (irrespective of colour) are not fit for purpose, and are only concerned with their own self importance...two years to get nowhere, ridiculous!

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  • 3 weeks later...

Well that bet ended valueless - I've no idea what is going to happen next, so I will largely avoid the betting on anything.

I guess if I had to bet - then we will Remain ???? We should have left by now, and extending it by two weeks or more will it really achieve anything?

Untitled.png.a7e10f3ebe26228f18613b0cff0d8784.png

 

---

There are still odds available for a No Deal in 2019. Personally, I can't see a No Deal happening at this stage.

image.png.11ddb55629ed526d647937bb3b2d029f.png

 

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1 hour ago, 201p said:

Well that bet ended valueless - I've no idea what is going to happen next, so I will largely avoid the betting on anything.

I guess if I had to bet - then we will Remain ???? We should have left by now, and extending it by two weeks or more will it really achieve anything?

Untitled.png.a7e10f3ebe26228f18613b0cff0d8784.png

 

---

There are still odds available for a No Deal in 2019. Personally, I can't see a No Deal happening at this stage.

image.png.11ddb55629ed526d647937bb3b2d029f.png

 

If there is a general election and remain MP’s in constituencies that voted leave get wiped out! 

All bets are off! 

Im not sure how smart voters are? If there was a general election would they vote on Brexit or stick to party politics? 

Would the new party formed of mps that have defected get an mp elected? 

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